Yes Bank Q2 profit jumps 25% despite sharp spike in provisions; loan book grows 35%

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Private sector lender Yes Bank has reported a profit growth of 25 percent year-on-year at Rs 1,002.7 crore for July-September quarter despite sharp spike in provisions, but asset quality deteriorated on sequential basis.

Profit in quarter ended September 2016 stood at Rs 801.54 crore. The growth was largely driven by higher net interest income, other income and operating profit.

Net interest income, the difference between interest earned and interest expended, shot up 33.5 percent to Rs 1,885.1 crore compared with Rs 1,412.16 crore in same quarter last fiscal.

Net interest margin in Q2 remained unchanged at 3.7 percent on sequential basis, but improved 30 basis points compared with year-ago quarter.

Yes Bank said advances during the quarter grew by 34.9 percent to Rs 1.48 lakh crore YoY on the back of robust growth in both corporate and retail businesses while deposits increased 23.4 percent to Rs 1.58 lakh crore YoY.

Retail banking advances rose by 78 percent YoY to 11.4 percent of advances (up from 10.5 percent as on June 30, 2017), it added.

Earnings matched analyst expectations. Profit was expected at Rs 1,008.7 crore and net interest income at Rs 1,855.3 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

Provisions and contingencies came in at Rs 447.1 crore for the quarter, sharply higher by 56.4 percent quarter-on-quarter and 176.5 percent year-on-year.

Provision coverage ratio declined to 43.3 percent at the end of September quarter, compared with 60 percent in June quarter.

Asset quality worsened during the quarter as gross non-performing assets came in at 1.82 percent against 0.97 percent in previous quarter and net NPA at 1.04 percent compared with 0.39 percent in June quarter.

“The increase in NPA and consequent provision is in conformity with RBI’s Annual Risk Based Supervision (RBS) exercise conducted for FY2017 (finalised in October 2017). We have fully absorbed the impact of such re-classifications in the results for Q2FY18,” Yes Bank said in its filing.

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In absolute terms, gross NPA stood at Rs 2,720.3 crore for quarter ended September 2017, which was sharply higher compared with Rs 1,364.4 crore in June quarter. Net NPA came in at Rs 1,543.3 crore against Rs 545.3 crore on sequential basis.

Total slippages as of September 2017 stood at Rs 1,989 crore, Yes Bank said.

The bank further said gross NPA divergence as on March 31, 2017 stood at Rs 6,355.2 crore and net NPA divergence at Rs 4,819.4 crore while divergence in provisioning was at Rs 1,536 crore.

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Other income (non-interest income) surged 35.4 percent year-on-year to Rs 1,248.44 crore and operating profit grew by 37.6 percent to Rs 1,906.67 crore for quarter ended September 2017.

[“Source-moneycontrol”]